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The retail price paid for pharmaceuticals is a result of several different inputs, few of which are well understood by consumers. Pharmacy mark-ups are especially elusive, as they can vary across several variables such as location (i.e. the province and territory where the drug is dispensed), drug coverage under public or private insurance, cash paying without coverage or whether the drug is considered a specialty medication.

Webinar Highlights

The objectives of this 60 minute recorded webinar are to explore the inputs and costs that are reflected in the final retail cost of pharmaceuticals, shed some light on how pharmacy mark-ups are determined, and discuss key themes and opportunities fueling the public debate.

Key points this webinar will cover are:

Several factors contribute to the final retail cost of prescription medications, including the ingredient cost, pharmacy mark-up, wholesaler up-charge, and professional services (dispensing and other fees).

Out of a projected $14.5 billion in public prescription drug expenditure in 2017, ingredient costs are believed to account for approximately 72.2 per cent of spending, while dispensing fees represent 20.3 per cent and mark-ups 5.4 per cent.

Private drug plans are projected to have spent approximately $12.1 billion on prescription drugs in 2017, approximately 75.8 per cent of which is attributable to the ingredient costs, 13.7 per cent to dispensing fees and 10.5 per cent to mark-ups.

Pharmacy mark-ups are added to the ingredient cost of a prescription medication, and they can vary across several variables such as location of drug coverage under public or private insurance, or whether the drug is considered a specialty drug. Other factors such as confidential discounts and recent changes in the distribution system for prescription drugs are also impacting costs.

Regulatory changes targeting a greater control of drug prices, including discussions of a national Pharmacare program, could be undermined if the other components of prescription drug pricing—such as mark-ups and professional fees—are not addressed.

About Isabelle

Isabelle Gagnon-Arpin is a Senior Research Associate in the Conference Board’s Health Economics and Policy group. She has over eight years of experience conducting research and analyzing health and social services data within a range of settings spanning academia, federal and provincial government, private and not-for-profit organizations. Since joining the Conference Board in January 2016, Isabelle has been leading research projects and providing expertise in epidemiology, health economics and public policy.

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